factual

If 360 Painting terminates the agreement due to a prolonged delay, what obligations does the franchisee have?

360_Painting Franchise · 2025 FDD

Answer from 2025 FDD Document

of Law or to seek an alternative way to comply with the Adverse Change of Law which allows both parties to continue to enjoy the economic benefits of this Agreement. If, in Franchisor's or Franchisee's judgment, this Agreement cannot be modified to comply with the Adverse Change of Law without undermining material elements of the franchise relationship or the enjoyment of the economic benefits thereunder, Franchisor or Franchisee (as applicable) may, at its option, without liability for such action or any further obligation to the other, terminate this Agreement and the territorial rights granted hereby upon 90 days' written notice to Franchisor or Franchisee (as applicable); provided that Franchisee shall be required to comply with all post-termination obligations set forth in this Agreement as a continuing condition to any such termination.

20. EFFECT OF AND OBLIGATIONS UPON TERMINATION

  • 20.1 Obligations upon Termination or Expiration. Upon the expiration or termination of this Agreement, whether by reason of lapse of time, default in performance or other cause or contingency, Franchisee shall:

  • (i) immediately return to Franchisor all material furnished by Franchisor containing confidential information, operating instructions, business practices, or methods or procedures, including, without limitation, the Brand Standards Manual;

  • (ii) immediately cease to operate within the Protected Territory, and cease all use of the Marks, and the use of any and all signs, slogans, symbols, logos, advertising materials, forms, products and other items bearing the Marks, and shall not thereafter, directly or indirectly, represent to the public or hold itself out as a present or former franchisee of Franchisor;

  • (iii) immediately pay all sums owing to Franchisor which may include, but not be limited to, all damages, costs and expenses, including reasonable attorneys' fees, unpaid Royalty Fees, and any other amounts due to Franchisor;

  • (iv) pay to Franchisor all costs and expenses, including reasonable attorneys' fees, incurred by Franchisor subsequent to the termination or expiration of the Franchise in obtaining injunctive or other relief for the enforcement of any provisions of this Agreement;

  • (v) if Franchisee retains possession of the Vehicles, at Franchisee's expense, make such reasonable modifications to the exterior and interior of the Vehicles as Franchisor requires to eliminate its identification as a Mobile Unit operated in connection with a 360 Painting Business and to avoid violation of the non-compete provision;

  • (vi) immediately upon demand by Franchisor, at Franchisor's sole discretion, immediately assign (or, if an assignment is prohibited, sublease for the full remaining term, and on the same terms and conditions as Franchisee's lease) its interest in the lease then in effect for the approved location to Franchisor and Franchisee shall furnish Franchisor with evidence satisfactory to Franchisor of compliance with this obligation within thirty (30) days after termination or expiration of this Agreement, and Franchisor has the right to pay rent and other expenses directly to the party to whom such payment is ultimately due;

  • (vii) if Franchisee retains possession of any real property used in connection with the Business, at Franchisee's expense make such reasonable modifications to the exterior and interior décor of the real property as Franchisor requires to eliminate its identification as a 360 Painting Business and to avoid violation of the non-compete provision;

  • (viii) continually refrain from operating or doing business under any name or in any manner that may give the general public the impression that this Agreement is still in force or that Franchisee is connected in any way with Franchisor or that Franchisee has the right to use the System or the Marks;

  • (ix) continually refrain from making use of or availing itself to any of the Confidential Information, Brand Standards Manual or other information received from Franchisor or disclosing or revealing any of the same in violation of Section 18.3 hereof, including (but not limited to) all data and information concerning any customers of the Business;

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)

What This Means (2025 FDD)

According to 360 Painting's 2025 Franchise Disclosure Document, if the Franchise Agreement is terminated, regardless of the reason, the franchisee has several obligations. The franchisee must immediately return all confidential information and materials provided by 360 Painting, including the Brand Standards Manual. They must also cease operating within their protected territory and discontinue all use of 360 Painting's trademarks, signs, slogans, logos, advertising materials, and other branded items. The franchisee cannot represent themselves as a current or former 360 Painting franchisee.

Financially, the franchisee is obligated to pay all outstanding sums to 360 Painting, which may include damages, costs, expenses, reasonable attorneys' fees, unpaid royalty fees, and any other amounts due. The franchisee is also responsible for all costs and expenses incurred by 360 Painting in obtaining injunctive or other relief to enforce the provisions of the Franchise Agreement after termination.

Additionally, if the franchisee possesses vehicles, they must modify them to remove any identification as a 360 Painting Mobile Unit. Upon 360 Painting's demand, the franchisee must assign their interest in the lease for the approved location to 360 Painting. The franchisee must also make necessary modifications to any real property to eliminate its identification as a 360 Painting business. The franchisee must cancel or assign to 360 Painting any assumed name registrations containing the name "360 Painting" or any of the Marks. Finally, the franchisee must fulfill all obligations to customers under outstanding contracts and warranties, even after the termination of the agreement.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.